Silver prices (XAG/USD) began the day on a positive note, gaining momentum despite a strong US dollar and prevailing risk-on market sentiment.

Currently, silver trades around $29.7275, after reaching an intraday high of $29.7545. This bullish rally is largely due to growing expectations of Federal Reserve rate cuts in September and December. These expectations were reinforced by dovish comments from Federal Reserve Chair Jerome Powell on Tuesday.

Economic Concerns and Geopolitical Tensions

While the upward movement in silver prices is noticeable, several factors are exerting downward pressure. Concerns over a global economic slowdown, persistent geopolitical tensions, and political uncertainty in the US and Europe are significant. These elements are making traders cautious about taking aggressive positions in silver.

According to Powell, “We are prepared to adjust policy as necessary to sustain economic expansion.” This statement has increased investor anticipation for upcoming Federal Reserve actions, adding to the cautious sentiment in the market. Traders are particularly focused on the release of the FOMC meeting minutes, scheduled later in the US session, to gain clearer signals about future Fed policies.

In the meantime, key US economic data points such as the ADP report on private-sector employment and the ISM Services PMI are also being closely monitored. These indicators are expected to provide further insights into the economic landscape and influence silver prices.

Impact of US Economic Indicators on Silver Prices

On the US economic front, the dollar has strengthened, buoyed by robust labor market data exceeding expectations. This has tempered some investor expectations for a September rate cut by the Fed. The strong economic data indicates resilience in the economy, reducing immediate pressure for monetary easing. However, markets are still pricing in increased odds of a rate cut in September and potentially another in December.

Investors remain cautious as they await clarity on the Federal Reserve’s stance regarding rate cuts. Powell has expressed satisfaction with progress on inflation but emphasized the importance of sustained movement toward the 2% target before considering any rate reductions.

JOLTs job openings rose unexpectedly from 7.919 million in April to 8.140 million in May, surpassing economists’ expectations of 7.910 million. This increase indicates a strengthening US labor market, which has the potential to boost wages and disposable income. Increased disposable income could stimulate consumer spending, contributing to demand-led inflation pressures.

The strengthened US dollar and robust economic indicators may curb immediate silver price gains. However, improved consumer spending could support industrial demand and inflation pressures, benefiting silver in the longer term.

Silver Price Forecast: Technical Outlook

Silver is currently trading at $29.68, up 0.56%. The 2-hour chart reveals key levels, with the pivot point at $29.55. Immediate resistance is at $29.84, followed by $30.03 and $30.32. Support levels are at $29.32, $29.08, and $28.87.

Technical indicators show the 50 EMA at $29.35 and the 200 EMA at $29.50, indicating an upward trend. A bullish engulfing pattern further supports a buying trend in silver. Silver remains bullish above $29.55, but a break below this level could trigger a sharp selling trend.